Reasonable notice of termination is probably the single most important topic for employees and employers to understand. This lecture explains the concept of reasonable notice in Canadian employment law in simple terms.
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Welcome everyone. This is Amer Mushtaq from You Counsel. If you want to understand only one thing in Canadian employment law then it is the concept of reasonable notice of termination. It is the single most important concept that has strong bearing on your employment relationship whether you are an employee or an employer.
So we'll talk about what this reasonable notice is and what does it mean to you and will explain it in simple terms. So you can apply it in your own circumstances.
Before we begin, we will start with our usual disclaimer that this course is not legal advice. So if you have any specific questions you must contact a lawyer or a paralegal.
Why is reasonable notice important. While basically reasonable notice is important because it to may translate into significant amount of money. if you are an employer you may end up providing a significant amount of money to your departed employee and if you are an employee you may be entitled to a large amount of money. So the relevance of reasonable notice is directly related to the money that you may get on terminations.
two things you must keep in mind. So with respect to reasonable notice if you are terminated without cause and you are entitled to common law rights on termination in that situation you will get reasonable notice. Once those two conditions are fulfilled then you are entitled to common law reasonable notice of terminations and just to give you a perspective this reasonable notice could be as high as twenty four months of income so if you make one hundred thousand dollars income annually then sometimes if you meet the criteria you may be entitled to up to two years of your pay. So that's a significant amount of money on terminations when you're actually losing your job.
So what is this reasonable notice the main thing you want to understand is that the term reasonable notice it's called reasonable notice but the proper term is common law reasonable notice of termination and so what is this it is a notice that an employer provides to an employee and basically tells the employee that his or her employment is going to end.
And so this common law notice or terminations notice could be given in one of three ways.
so option number one is working notice. employee can come to you and say Hey Mary Hey John. Your employment is going to end, is going to terminate as of December thirty first of this year. So let's say twelve months from now and I am giving you this working notice you are required to come to work every single day as if you are an employee and perform your duties. We will provide you your salary and when December thirty first comes, that's your last day and then you go home and never come back and then you don't get any more money. This is it so it's a working notice you worked the entire twelve months or whatever the duration of the reasonable notices and then you go home and that's the end of it. So there's no money at the end of it.
Or the employer may say Hey John. Hey Mary your employment is ending today. So return your keys return your access cards and then at the end of the day you go home or you leave now. And you do not come back and here is the money for twelve months of your pay or they may say will will continue to give you salary for twelve months until you find another job or something like that so. But the termination happens immediately and then you get the money for the work for the notice period so that's option number two which is actually the most common option most employers do not like to retain an employee on their premises, who knows that his or her employment is going to end sometime in the future because it makes it difficult for that employee to continue working knowing that he or she is going to lose his or her job in sometime in the future and there's a date that has been announced of that person and also it's made you know jeopardize a relationship. It may poison the work environment so majority of employers do not like to give working notice. Sometimes it works better and employers do that but mostly the employers do not give working notice that they would rather give you money in lieu of working notice.
or option number three is a combination of both. So the employer can give part of working notice and part of money in lieu of notice the employer may say it happens sometimes when the when the factory is closing the plant is closing down in three months time and your reasonable notice requirement is let's say twelve months the employer may say we expect you to do work for the three months or three months of the work notice and the remaining nine months will give you the money so it could be working notice it could be money in lieu of working notice or money you have notice or it could be a combination of working notice and money.
So that's what a reasonable notice is, it is a notice that is provided by the employer to the employee providing that employee a specific date which will be the final date of employment of that employees a notice of termination. So we talked about common law right so you're entitled to reasonable notice if you are entitled to common law rights and we're talking about common law reasonable notice well we're not talking about the statutory termination notice which is a completely different thing.
So one important point you want to understand is that you get common law rights by default. common law rights are presumed. What do I mean by that if you get hired with a company and let's say you don't have any written job offer written employment contract whatsoever. Someone interviews you and says well come we're going to pay you X. amount of dollars and your position will be X and can you start on such and such day and you say yes. And so that is an employment contract even though it's verbal, but you have entered into it and when you have entered that employment contract then you by default have all the common law rights and that means if you are terminated for certain the specific circumstances, then you are by default entitled to common law reasonable notice of terminations But the second thing you want to keep in mind is that that common law right or the reasonable notice of termination that presumption is rebuttable. what that means is that that presumption can be displaced by a contract. So if you have a written employment contract the employer can put in a clause which can change your common law right on terminations. So it can remove that reasonable notice by contract and so how it's done.
We're going to talk about that in the next slide. so displacing common law reasonable notice.
one way to do that is the contract may say employment contract may say first of all it will have a specific terminations clause it will say if in the in the event we terminate your employment without cause you will be entitled to your statutory terminations rights and nothing more. So we are limiting your rights to statutory rights on terminations and we've spoken about that in a separate lecture and maybe we'll talk about it a bit more but each province has a specific statute that deals with employment relationship terminations and all of those and they have specific rights for the employees. So for instance in case of Ontario, we have the Employment Standards Act 2000 which has a specific clause that say's that if you're employed for X. amount of years you get X weeks of pay as termination pay. So those statutory rights are very very minimal there's no comparison between the statutory rights in employment Standards Act and common law right so there's a huge difference. So a contract can actually take away your common law reasonable notice and say what you will get is only statutory rights and that's legal. It's allowed an employer can do that.
So that's one way of doing that.
the other way is that the the contract may say we retain your common law rights and if the contract retains your common law rights then that's what you're entitled to. Or the contract may not have any clause about terminations whatsoever and if there is no termination clause, Then the presumption is still there and so you are still entitled to common law reasonable notice.
the third way that employer can do is give you something in between so more than statutory rights but not common law rights. so they may say we'll give you your statutory rights Plus two weeks or plus a month or something like that which may be much less than common law rights but it is at least more than your statutory right so that could be a clause in your employment contract.
or in some cases which are really really rare but in some cases your contract may provide your terminations rights which are actually more than common law rights. I have seen this and you may have noticed this. This usually happens mostly in appointments which are political appointments you would see in newspapers that a large sort of crown corporation or semi Crown Corporation have been have been restructuring and it's in the news the C.E.O. did not perform so well and they have terminated the C.E.O.'s employment and then you realize that C.E.O. got and you know hundreds of thousands of dollars and sometimes millions of dollars in termination as a severance package and everybody's up in arms about it as to how they got such big severance. The Legal answer that you will get is unfortunately that was part of his or her contract and so there's no way that we can take that away. so there are circumstances where termination rights are negotiated much more than common law rights but it's very very very rare.
You won't see it as a you know and my experience is a sort of these political appointments where this kind of thing happens. So these are some of the ways that contract can displace the presumption of reasonable notice.
Now I said you could get up to twenty four months of pay and not everybody can get that and that's sort of an extreme example but what are the factors that you can keep in mind that decide, for the courts what kind of factors courts consider in deciding what is an appropriate common law reasonable notice for a specific case. there is no formula. There is no one reason there are a variety of factors that the court considers and then decides what would be an appropriate common law reasonable notice for this employee who has been terminated without cause. there's a case in which these factors are basically listed but they talk about more factors to be considered and they're called Bardal factors. this is a term that is used in the case law and employment lawyers use this often every time they refer to Bardal factors, those are some of the factors the court will consider in deciding reasonable notice.
So when you look at the cases, the jurisprudence, the courts have considered as many as about hundred seventy different factors in arriving at what is an appropriate reasonable notice. but there are four most common factors that you want to keep in mind. those are the essential ones that would apply to every single case. number one is age. What is the age of an employee who has been terminated and in courts mind the older the employee is the more reasonable notice of termination should be provided. courts believe that it will take older employees longer time to find another job as opposed to younger employees. So their reasonable notice of terminations on the basis of their age will play a role in an increase reasonable notice.
second factor to keep in mind is length of service. The longer the employee's service with the employer is, the longer the notice period would be. so if you are long service employee then you will get higher notice and I have had clients who have worked for an employer for twenty years plus and they may be entitled to twenty four months of pay depending upon their other factors.
third factor that is considered is the position of the employee. Senior management employer your management employee, middle management, lower management, clerical, technical etc. What is the kind of position you're occupying and then the principle the court applies generally is that the higher the position of the employee the higher the notice period. So if you are a C.E.O. of a company you will probably get a higher notice than if you were a much junior employee.
and then the fourth factor is what are the chances of finding another job for that specific employee. And there is no sort of empirical evidence generally available but there are different factors considered. so I'll give an example some time ago there was significant reduction in automotive industry jobs and whatever jobs were being eliminated, there were no alternative positions. and so many engineers who had automotive industry experience for many many years had to retrain to go into another job. so that was a factor that for them ie. chances of finding another job in Canada in the automotive industry was slim and so the court would award higher notice.
so these are the factors that courts will consider in deciding what would be an appropriate reasonable notice and as I said earlier, it could be as high as twenty four months or sometimes even a bit more.
So what is it that you want to carry from this course from this lecture is that when you are negotiating your employment contract, you are not hired yet, you are a candidate. you are at a stage where the employer is making you an offer and has provided you with an employment contract and if you have any room to negotiate, sometimes you don't, sometimes you just accept you're just happy that you got a job and you just sign at the dotted line and you take the job. but in many many cases you have room to negotiate and if you do, you want to make sure that your common law terminations rights are are not displaced and they remain intact. and I've advised many of my clients when they have been faced with a job offer and they have successfully negotiated that position because if the employer really wants you for that position if the employer believes that you are an important addition to their team then they will value your negotiation they will value that you are going to look after some of your own interest in that employment contract.
and then the second part is that even if you already have an existing employment contract or you're not able to negotiate something different. You want to make sure that you properly review your existing employment contract because even if it has a terminations clause in many cases that termination clause maybe challenged, may be shown or may be proven, that it's unlawful, it's improperly drafted. and then that will not rebut the presumption for a common law notice and you may be still be entitled to it.
So it's a complex area in employment law which terminations clauses are valid and which are not and if you talk to many employment lawyers they will give you the advice that you know over ninety percent ninety five percent of the time smart employment law counsel are able to challenge the appropriateness of a specific termination clause, get it thrown out and then have their client get some reasonable notice.if you are unclear if you're unsure you want to talk to an employment lawyer so you understand your rights because what is at stake is a significant amount of money.
So those are two things that you want to keep in mind and hopefully this gives you some understanding of what is common the reasonable notice and we will have many more lectures. If something is unclear or you want something elaborated upon by all means reaches out to us, write to us in the comments and will be happy to cover that in future lectures. Thank you for watching.